Oil heads for longest run of weekly gains in 14 months on China

“All of a sudden, the market looks tighter than we thought,” the Paris-based IEA said in its monthly report.

China will use 390,000 barrels a day, or 4%, more oil this year than in 2012, to reach 10 million a day, according to the adviser to energy-consuming nations.

The euro slipped from near the highest level since February 2012 as Benoit Coeure, a member of the European Central Bank’s executive board, said the ECB has no view on whether banks that tapped its long-term financing facility should repay those funds when that possibility comes up in the next few weeks.

Oil touched an intraday low of $94.91 a barrel after the euro accelerated its decline. Europe’s shared currency dropped as much as 0.7% to $1.328. A weaker euro and stronger dollar reduce dollar-denominated oil’s appeal as an investment alternative.

“The strong dollar probably prompted a little bit of profit-taking,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The market is going to move back and forth on economic indicators.”

Consumer Confidence

The Thomson Reuters/University of Michigan preliminary January consumer sentiment index decreased to 71.3 from 72.9 the prior month. The gauge was projected to climb to 75, according to the median forecast of 74 economists surveyed by Bloomberg.

U.S. oil demand fell to the lowest level in 16 years in 2012 while domestic output surged the most in more than 150 years, the American Petroleum Institute said today.

Total petroleum deliveries, a measure of demand, dropped 2% from 2011 to 18.6 million barrels a day last year, the lowest level since 1996, the industry-funded group said in a monthly report today.

Domestic oil production jumped 779,000 barrels a day in 2012, or 14%, to 6.43 million. That’s the biggest increase since 1859 and the highest level in 15 years, API said.

“There is a sense that supplies are pretty much abundant,” Lynch said.